October 17th, 2011 by Noam Yalon
The Social Security Administration will announce the 2012 Social Security wage base on Wednesday. They will also announce the 2012 cost of living adjustment. Please come back to our website on Wednesday for the details when available.
October 11th, 2011 by Noam Yalon
Compliance with employment regulation can be challenging for any company but it is particularly onerous on small businesses which typically spend a greater percentage of their revenue keeping up. Regulations are imposed by the federal government, state governments and sometimes local municipalities. It can be a process to understand which laws apply to employment issues as they arise. That process just became easier.
On September 6, 2011 the New Jersey Department of Labor and Workforce Development adopted new regulations on overtime payments to employees. The new regulations will make New Jersey’s overtime standards consistent with federal regulations. The new consistency in the treatment of overtime will make it easier for businesses to comply and make it easier for companies that do business in multiple states.
Previously New Jersey law was similar to federal law in that there was a requirement of employers to pay employees minimum wage for the first forty hours worked, and to pay overtime for all hours worked over forty. Additionally, both laws provided exemptions for individuals employed in an administrative, executive, professional or outside sales capacity. The differences were along the lines of job duties and actual time spent working on exempt activities versus non-exempt activities. Even with just one set of laws to interpret, answers can seem more of a gray than a black or white.
Let’s examine a real life example. Earlier this month four US Open umpires filed a lawsuit claiming that the U.S. Tennis Association failed to pay them overtime during the three week tournament in violation of federal and state law. The Umpires allege that they regularly work more than forty hours in a week during the tournament, but do not receive overtime pay. So is umpiring an exempt activity? That is probably a secondary issue. First the court will need to decide if a three week stint even counts as an employment relationship or is it more appropriately a classified as a subcontractor relationship not subject to the employment laws. Different regulations and more gray area. Stay tuned.
As for now the New Jersey Department of Labor deserves credit for simplifying their overtime rules and following the federal law.
If your company is facing uncertainty with employment regulation, know that you are not alone. A local labor law attorney can be a valuable ally. Please call our office if you would like a referral.
September 9th, 2011 by Noam Yalon
President Obama announced today that he wants to extend and expand a payroll tax cut that is scheduled to expire at the end of the year. On this one point it looks like he may just get his way. The current tax cut, which is one year reduction for calendar 2011, applies only to workers and reduces Social Security taxes from 6.2 percent to 4.2 percent. Employers still pay the 6.2 percent rate, which is applied to wages up to $106,800. Obama is proposing to extend the tax cut for a year and make it bigger — reducing the Social Security taxes paid by workers to 3.1 percent. The plan would also reduce Social Security taxes paid by small businesses from 6.2 percent to 3.1 percent. The merits of such a plan on a macro scale will be debated but this is welcoming news for many small businesses and the average worker.
The existing one-year break for taxpayers was created under The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. In terms of dollars, it is good news for wages at the middle and towards the top. A taxpayer making $50,000 per year is now saving $1,000 (2% of $50,000). A married couple who each makes $100,000, is saving a combined $4,000 (2% of $200,000). At the low end, though, taxpayers miss out. At least compared to the 2010 version of wage tax relief. The Making Work Pay Credit was in place for calendar 2010 and was a flat $400 for individuals and $800 for married couples. Taxpayers at the lower end could get the full credit even if they didn’t make that much money.
The current tax relief also benefits self employed individuals. Instead of paying self-employment tax of 12.4% for the year, the amount is reduced to 10.4%. That reflects the same 2% discount as employees receive. It does not provide relief to anyone not participating in the social security system such as federal employees. Expect the new 2012 policy to be more of the same with savings increasing substantially.
The proposed new tax cut is part of a package of nearly $450 billion in tax reductions and new federal spending in an effort to revive the weak economy. Obama thinks that the plan “will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and if they hire, there will be customers for their products and services.” The goal is to increase take-home pay for workers in the hope they will spend the money, creating more demand for consumer goods and services. Workers making $50,000 a year would see their take-home pay boosted by $1,550; those making $100,000 would get $3,100. Economists say the president’s jobs package could go a long way toward preventing the economy from getting worse, but it might be asking too much for the package to significantly boost job growth.
I don’t know about boosting job growth but it does look like there will be a few more dollars in our paychecks though 2012. If you are not already doing so you may want to consider appropriating that money for something specific. That way you don’t fall into the trap of habitually spending money that is only there on a temporary basis. The ideal scenario is applying those funds directly to a high interest credit card or towards a retirement plan such as a 401K or on IRA. However ,if you want to get more in the spirit of the stimulus then spend it! But maybe accumulate the savings separately and spend it knowing it is tax relief money.
October 20th, 2010 by Noam Yalon
On October 15th, 2010 The Social Security Administration (SSA) announced there will be no change in the Social Security and Disability Insurance taxable wage base for 2011. This is the second year that there will be no change. In addition, there are few other cost-of-living adjustments for 2011 because the consumer price index did not increase in the third quarter of 2010, compared with the same period in 2009.
With the Social Security wage base unchanged at $106,800 for 2011, the maximum 2011 OASDI tax payable by each employee is $6,621.60, or 6.2 percent of the wage base. The employer matches the amount with an equal contribution.
The Medicare portion of the Federal Insurance Contributions Act tax continues to apply to all taxable wages earned, and the rate remains at 1.45 percent.
August 25th, 2010 by Noam Yalon
The Federal Hire Act (Hiring Incentives to Restore Employment) was signed into law by President Obama on 3/18/10, the purpose of which is to stimulate the hiring of new personnel. The act provides incentives to employers in two ways:
For more information and a list of frequently asked questions about the HIRE Act affects your business, you can download the following PDF file.
